Die Mannschaft were the only team in the tournament to win all their group matches as they managed to top the so-called "Group of Death" and set up a quarterfinal meeting with Greece on Friday.
When asked who he thought were the strongest team in the tournament so far, Lippi told La Gazzetta dello Sport: "Germany. [They have] class and personality."
The 2006 World Cup winner also praised striker Mario Gomez, who is joint-top scorer of the tournament with three goals along with Russia's Alan Dzagoev and Mario Mandzukic of Croatia.
"Gomez is in a state of grace, if he has the ball, he scores goals," he said. "But there is not only Gomez, the Mannschaft have many other weapons too."
Switching his attentions to Italy's fortunes, Lippi said the Azzurri did well to beat the Republic of Ireland 2-0 and seal qualification for the knockout stages of the tournament, but warned tougher tests lie ahead.
"We unlocked [Ireland] psychologically, then finally found the goals through [Antonio] Cassano and [Mario] Balotelli," he said. "Now comes the hard part. The strength of rivals increases and the horizon is Germany."
Italy faces Germany's bitter rival England in Kiev in the final quarterfinal on Sunday at 2:45 p.m. ET.
Goal.com has a new podcast! Goal Daily Podcast is a MUST for all Soccer fans and discusses the very latest news and views. What’s more when you sign up the service is FREE for the first month and you can cancel anytime.
Follow GOAL.COM USA on